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January 25, 2010

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Managing the health and safety of temporary workers

David Branson looks at recent employment-law cases concerning agency/contract workers that could spill over into the area of health and safety law, and discusses these implications in the context of the roles and responsibilities of the various parties involved when contract labour is used.

Agency workers now constitute a large and growing segment of the UK workforce, with an estimated 1 million workers in more than 17,000 businesses.1 As a result, the welfare of such workers should be of concern to both the government and the health and safety profession. In many cases, these employees are low or semi-skilled, and effectively rely on an employer to provide health and safety arrangements.

Until recently, the courts had tended to see agency workers as being employed by the party on whose premises they worked — in effect, by the client of the employment agency, or the so-called ‘end user’. In employment cases, the courts would usually find that there was an implied contractual relationship between the agency worker and the end user. This approach was taken in the case of Dacas v Brook Street Bureau,2 in which a cleaner engaged by the Brook Street employment agency was hired out to Wandsworth Borough Council. When the council terminated the arrangement, she claimed for unfair dismissal.

Although there was no written contract between herself and the council, the Court of Appeal held that an employment relationship could be implied between the two parties because the council exercised effective day-to-day control over her actions. In effect, the court created an employment relationship for the agency worker, which would ensure protection for the weaker party.

In this case, the court was taking a ‘realistic’ approach, looking at the reality of the employment situation, and devising a contractual relationship accordingly. However, this approach caused difficulties, because the employment agency was still contractually responsible for ‘hiring and firing’ the worker, even though the end user had the real control over the working conditions.

In addition, in some cases, an agency worker might be engaged to the end user through their own (the worker’s) limited company under a contract for services. This was the case in Cable & Wireless plc v Muscat (2006),3 where the agency worker actually set up his own company to provide services for the end user. Despite this, the Court of Appeal still held that he was employed under an implied contract of employment, and could claim unfair dismissal.

This decision made the law seem confusing and unreasonable, and thus opened the way for a change of approach. The fact was that, in some cases, the contractual arrangements reflected the desire of the worker to arrange his own terms and conditions, and to work as a self-employed party under a contract for services. However, the problem in many cases is that the worker has no real control over the framing of the contract, and a self-employed contractual arrangement might be used simply to limit the liability of the agency, or end user.

In two recent employment cases involving agency workers, the courts moved away from the ‘realistic’ approach and focused purely on the express terms of the contract. In James v London Borough of Greenwich (2008)4 and Consistent Group v Kalwak (2008),5 — both cases involving the dismissal of low-skilled agency workers — the Court of Appeal upheld the position that they were self-employed and did not have a contract of employment with either the agency, or the end user.

The court refused to look at the practical realities of the situation and, in particular, failed to take into consideration such matters as the skill of the workers, and how they were recruited. This was particularly significant in the Consistent Group case, which involved unskilled foreign workers being brought into the country, who were clearly in a very vulnerable position. Although both cases related to unfair dismissal, there are possible implications here in respect of liability for health and safety matters if agency workers are seen as self-employed.

In the future, statutory changes may clarify the situation — for example, the EC draft directive on temporary workers seeks to make the agency contractually liable as an employer.6 But the directive remains to be implemented so, at present, the express contractual terms of the agency arrangement are likely to define the employment relationship, which, in many cases, will mean that agency workers are deemed to be self-employed.

Liability in civil law
In civil law, the main liability lies in the tort of negligence, following the leading case of Wilsons & Clyde Coal v English (1938).7 This has been supplemented by a great many subordinate health and safety regulations, which, in most cases, also give a right to claim for breach of a statutory duty.

In the tort of negligence, the liability of the end user to a self-employed worker will depend on the extent to which the courts hold that the worker is in business on his own account, and therefore in control of his own actions. In the case of a skilled worker, such as a self-employed electrician or plumber, this may well be the situation, and the worker will have to rely on any insurance he has taken out himself.

In the case of Roles v Nathan (1963),8 for example, when two skilled contractors were killed by poisonous fumes while refurbishing a central-heating system, the court held that the occupier was not liable for the deaths, and liability lay with the workers themselves. This has normally been the approach taken in any case where the worker is seen as a skilled person effectively working on their own account.

On the other hand, where the worker is seen as essentially unskilled, the courts have been ready in the past to imply an employment relationship, and put liability on the party in control of the undertaking in which he is working — the end user, as such.

This can be seen most clearly in cases involving labour-only sub-contractors, such as Lane v Shire Roofing.9 Here, a labour-only sub-contractor was seriously injured when he fell from a roof while working for the defendant on a self-employed basis. The Court of Appeal held that the worker should be treated as an employee, because the end user had effective control over how the worker did the job and over the organisation of health and safety on the site.

The liability here will also apply where there is breach of a statutory duty, as most of these now refer to liability for ‘workers’ and this is interpreted as covering both employees and self-employed persons.
In my opinion, unskilled agency workers should be seen as equivalent to unskilled, labour-only sub-contractors, and liability should fall on the end user, as they are in the position of control over the employee as regards safety matters.

However, the uncertainty created by the recent Court of Appeal decisions in James and Consistent Group means they may sometimes be seen as self-employed, when the contract is so framed, which may remove liability from the end user (or the client of the agency), and place it on the shoulders of the agency worker — a clearly unrealistic and unfair situation.

Where the court finds that the worker is the employee of the agency, another set of issues arises. As an employee, the worker can claim compensation for his injury from the agency. The agency could then claim against the end user to obtain a contribution from them. However, as such, there is a lack of direct correlation between the party causing the injury and the party paying out the compensation.
It could be argued that the agency has the prime liability, as it sends the employee to work for the end user.

Indeed, this view is supported by the Employment Agency Standards Inspectorate, which has recently warned employment agencies hiring out asbestos-removal workers that they have an obligation to ensure that the workers are properly trained and aware of the hazards before they are sent to the end user.10

However, it could also be argued that the end user should be primarily liable, as they have much greater knowledge of the hazards involved, and are directly responsible for creating the risks, rather than the agency. Moreover, the end user is the party benefiting from running the enterprise, and so should be willing to shoulder the risks involved. This is the basis of the concept of ‘enterprise liability’, as developed by such writers as Brodie.11 This issue is important, because it is clear that agency workers are much more likely to be injured at work than other employees, as evidenced in a recent EU report.12

In conclusion, the legal position in respect of liability for injury to an agency worker is still unclear. The earlier health and safety-related cases suggest that in the case of an unskilled worker, the end user will be civilly liable for any injury in negligence because an implied contract of employment will exist, as per Lane, while statutory duties usually extend to the self-employed anyway. If the worker is seen to be an employee of the agency it will also be civilly liable for both an action in negligence and in breach of any statutory duty. However, if the worker is seen as a skilled contractor, then he may have to rely on his own insurance, as per Roles v Nathan.

Nevertheless, if the readiness of the Court of Appeal to look at the express terms of the contract in employment cases carries over into health and safety-related cases, many more agency workers may be seen as self-employed and responsible for their own health and safety. In my opinion, this would put an intolerable burden on unskilled agency workers.

Criminal liability
With regard to criminal liability for agency workers, we are concerned with sections 2 and 3 of the Health and Safety at Work, etc. Act 1974. Where the agency worker is deemed to be an employee of the agency, s2 will apply, and the agency will be required to ensure the health and safety of its employees, so far as is reasonably practicable. This duty is very extensive and cannot be delegated to another party.

In other situations, s3 will apply, both where the worker is self-employed, and with respect to any liability for the end user. This section requires an employer to conduct his ‘undertaking’ in such a way as to ensure, so far as is reasonably practicable, that non-employees are protected against risks to their health and safety. Section 3 has been very widely interpreted by the courts, and will impose liability on an employer both for his employees and for contractors working in his undertaking.

The extent of the liability can be seen in such cases as R v Associated Octel.13 Here, the employee of a specialist contractor was badly burnt while repairing the lining of a storage tank. The company employing the contractor was held criminally liable for the accident, as it was carried out on their premises, and should have been covered by their permit-to-work system. The employer was made criminally liable for the activities of competent skilled contractors carrying out activities on his behalf, even though his control over these activities was limited. Agency workers who are deemed to be self-employed will be seen as contractors and, as such, will fall under this section of the HSWA 1974.

Reasons to be realistic
It seems that criminal liability is based on the ‘realistic’ approach to the employment relationship. The issue of control is the key factor in establishing liability for health and safety breaches. In most cases, the end user is liable as the party who has effective control over events, and who is in the better position to ensure effective health and safety management. This is reflected in the fact that the end user will usually be a larger organisation, with a more sophisticated safety management system. It is clearly preferable to a situation where liability is passed on to the worker, who may be in no position to control events.

Moreover, I would argue that this should also apply in the case of the agency to some extent, because the end user exercises the real control. In effect, the liability here is related to the principle of deterrence, which underpins much of criminal law, as the party able to control events is the party who is made liable in law. This approach should take priority over any attempt to focus purely on the formal contractual position of the parties, with regard to matters involving health and safety.

I believe that this approach should also be followed in the case of civil liability, for a number of reasons. Firstly, the key reason behind civil liability for accidents at work is to ensure that the injured party receives adequate compensation. To this extent, it is essential that the liability falls on the party best able to ensure against this liability. In most cases, this will be the end user, as he will normally have both employer’s liability insurance and public liability insurance.

A ‘self-employed’ worker, engaged through an employment agency, is unlikely to be able to afford such insurance. Moreover, the courts should guard against any attempt by parties in a stronger financial position to shift the burden on to the shoulders of parties less able to cope. Naturally, this situation will not apply where the worker is an employee of the agency, as he will be covered by the insurance that the agency is required to provide by law, but this may not always be the case.

A second reason is that another key purpose of civil liability for negligence is deterrence. In this case, the end user would seem to be the best party to bear the liability, as they are the party most directly responsible for any accidents, because they are usually in control of the workplace. If the worker is skilled, then it may be argued that such a worker would be responsible, at least partly, or in whole.

However, in the case of an unskilled worker, although he should bear some liability for his accidents, I believe that the main liability should lie with the end user, as the worker has limited control over health and safety, and the end user is in the best position to provide effective supervision. In addition, the end user should be responsible for establishing and maintaining effective health and safety management in the workplace.

A similar argument applies where the agency is the employer, as the evidence is that, in general, employment agencies do not really ensure that health and safety is effectively covered.14 This is because they do not have the expertise to understand the different health and safety issues of the various workplaces to which they send their workers. This fact is known to the end user, who will usually be expected to provide specific induction training and long-term supervision.

While it is fair that the agency should have some liability for ensuring the training of their workers, and they should also be responsible for not sending ill-equipped workers into hazard
us situations,10 the end user is in the best position to provide for their health and safety at work, once the worker is given the necessary pre-employment training. There is a real possibility otherwise that the end user may use agency workers as a way of evading its civil liability for health and safety, by trying to push all the blame on to the agency.

Finally, I think we come back to the original motivation for placing liability on the end user. It is the end user who creates the risk inherent in their enterprise, and so it is they who should bear the liability if anything goes wrong. To be able to pass liability on to others would seem to undermine the principle of what is just and reasonable, both of which underpin the nature of liability in civil as well as criminal law.

There is a real concern that the recent interpretation of the legal status of agency workers might undermine the health and safety of these workers by limiting the liability of the end user in civil law. The recent judicial decisions involving agency workers have led to a retreat from the more ‘realistic’ approach in respect of liability for such workers and towards more focus on the formal requirements of the contract. While this may solve some of the more problematic issues about divided responsibility between agencies and end users, it threatens to undermine the whole structure of liability with respect to health and safety at work.

I believe that the imposition of civil liability on the end user is both the fairest and most effective way of ensuring that the health and safety of the worker is protected. This is why this approach is followed in the criminal law. To make the agency worker liable for his own actions, when he has little real control over his working environment, is not only unjust and unreasonable but also undermines the other key reasons for civil liability, such as the availability of compensation and the need for deterrence. To place the liability on the agency may provide for compensation, but it still does not really address the issue of deterrence, and the understanding of what is just and reasonable.

The courts need to maintain a robust attitude when dealing with health and safety issues, and should focus on the realities of the situation rather than the formalities of the contractual relationship. To ensure effective health and safety provision, liability in both civil and criminal law must lie at the door of the person who has created the risk, and no one else.


Noel Walsh, a partner in the commercial insurance team at law firm Weightmans LLP, outlines the main responsibilities in the client[/contractor relationship and provides a reminder of HSE guidance in this area.

Although an employer does not have control over the hiring, firing and paying of contract workers they may still, in the eyes of the HSE and under an insurance policy, be responsible for their health and safety.

As a rule of thumb, if you instruct the individual, provide them with tools to carry out their work, and benefit from their labour, then they will be regarded as your employee for insurance purposes. This, in law, is known as the ‘control’ test: who lays down what is to be done, the way in which it is to be done, the means by which it is to be done, and the time when it is to be done? If it is you or your company, then you are likely to be responsible for the safety of that worker.

Therefore make sure that you inform your insurer about the number of contract or agency workers on your site so that they are all covered under your employers’ liability policy.

But as with so many things, there are exceptions. For example, in the case of skilled employees given the discretion to decide how their work is done the question will often be broadened: whose business it is? Is the worker carrying on his own business, or is he carrying on his employer’s? If you have any doubts over your responsibility for these workers, check your insurance policy and clarify any points of liability you are unsure about.

Client/contractor relationship
In any client/contractual relationship, both parties have duties in health and safety law. These duties are defined by criminal statute (the Health and Safety at Work, etc. Act 1974 and the Management of Health and Safety at Work Regulations 1999) and cannot be passed on from one party to another by contract.

The extent and responsibilities of each party will depend on the circumstances and the terms of the contract but the HSE has issued the guidance, Use of contractors: a joint responsibility  When appointing a contractor an employer should consider the following:

  • identify the job and all aspects of work you want a contractor to do, including work within the preparation and completion phases;
  • select a suitable contractor and sub-contractor and make sure that they understand the levels of performance you expect from them;
  • agree risk assessments and safe systems of work (SSoW) for contracted work (an employer should already have a risk assessment for the work activities of their own business, but the contractor must also assess the risks for the contracted work independently before both parties agree);
  • provide employees and others who may be affected by the work activities with information, instruction and training ;
  • cooperate with and coordinate the contractor (it is worthwhile setting up liaison arrangements with all parties, such as regular meetings or briefings, especially where more than one contractor or sub-contractor is engaged);
  • consult with the workforce and ensure that where there are recognised trade unions involved, consultation is made through safety representatives appointed by the unions; and
  • how you will manage, supervise and monitor work activities of contractors (consider what equipment will be used, working procedures used, the number of people needed to do the job, and the reporting of any accidents that do occur).

The essence of the HSE guidance is that both parties will be liable under health and safety law if an individual gets injured, or has a fatal accident in the workplace. The closer both parties follow the steps given above, the better prepared they will be, should any accidents occur.

Noel Walsh can be contacted at [email protected]

1    Department of Business and Regulatory Reform
2    (2004) England and Wales Court of Appeal (Civil) 217
3    (2006) EWCACiv 220
4    (2008) EWCA Civ 35
5    (2008) EWCA Civ 430
6    COD/2002/0072
7    (1938) AC 57; (1937) 3 All England Law Reports (All ER) 628 HL
8    (1963) 1 Weekly Law Reports (WLR)1117
9    (1995) Industrial Relations Law Reports  (IRLR) 493
10    ‘Agencies failing to protect asbestos workers’, SHP December 2009, News, p8
11    Brodie, D (2006): ‘The enterprise and the borrowed worker’, in Industrial Law Journal, Vol.35(1), pp87-92
12    European Social Statistics: Accidents at Work and Health-Related Problems: Data 1994-2000 (Luxembourg Statistical Office of the European Community)
13    (1994) IRLR 540
14    Wiseman & Gilbert (2000): ‘Survey of the Recruitment Agencies Industry’, HSE Books

David Branson is coordinator of health and safety courses at Middlesbrough College.

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